John Deere lays off hundreds of employees, after a $10B profit year
John Deere lays off hundreds of employees, after a $10B profit year
An unexpected company is now laying off hundreds in Illinois by the end of summer due to a decline in market demand for its products.
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I get why people are upset by the headline. It is written to provoke anger. Unfortunately, anger at the wrong issue.
I understand the argument that a large company can absorb the cost of workers they don't currently. Though it's unrealistic to expect them too.
I lived in the Quad Cities for a number of years. A large majority of people I know, both family and friends, worked for either Deere or Case IH - until they closed the plant in East Moline.
Layoffs are a yearly thing. Deere, Case, Caterpillar, they all hire a bunch of people in the beginning of the year and lay them off towards the end. It's typically around August or September, and they announce it in July. Everyone in the Quad Cities knows it. It is expected. Sometime early next year, they are going to hire these jobs back. The people who take these jobs go into it knowing this is going to happen.
It can suck being let go and some people might struggle with it. Those who are used to this cycle treat it as a well-paying seasonal job. Many already have something else lined up. This is only a single, anecdotal, data point, so take it with a grain of salt... one of my uncles works for Deere and is a bus driver for one of the school districts. He knows Deere is going to let him go by fall so he has the driving job for the rest of the year. In spring, he will go back to Deere.
Perspective is also important. Deere has somewhere between 80k and 85k employees. They are laying off < 1000 based on this story. That's the equivalent of a small, 80 person company hiring 1 person to get through the holiday season, then laying them off in January. Next year, they will do it again.
Headlines like this are nothing more than a distraction from real issues. For example, why does any company have multi-billions of dollars in profit to begin with? It just means they are charging more than they need to. The farmers who buy Deere equipment then have to charge more for their produce. Which means the stores have to charge more. Which means we pay more for our food. Deere's profits are leading to higher food prices for everyone. To me, that is more of an issue than 1/80th of their workforce being in a hire/layoff cycle.
Here's the deal: these people aren't being laid off because the company is losing money, they are being laid off because the company is not making as much money as it predicted it would last quarter.
Now, not making as much money as you thought while still being profitable is not a bad thing except for one person: the c-level executive.
The c-level has profit targets he needs to hit to unlock a huge bonus. Hundreds of thousands of dollars are at stake for him, that one individual.
So these hundreds of people aren't losing their jobs so the company can thrive and be healthy. They're losing their jobs so one person can make hundreds of thousands of dollars more on top of their existing salary which was always guaranteed to them.
No, it’s also bad for shareholders. Shareholders need to see the numbers go up in order to get returns on their investment, either in the form of buybacks or dividends. A company that isn’t seen as worth investing in will show a decline in share price, causing shareholders to lose money.
Would the investors not risk adjust? Layoffs mean the company's output is shrinking, not growing. They get a short term savings at the cost of long term productivity.
Investors buy on the rumours and sell on the news. They make money as long as the numbers go up when they’re long and down when they’re short.
I think John Deere is seen as a pretty dominant company in its industry. It locks in tons of farmers into its repair/service program.
I don’t know anything about the specifics of the layoffs but I’d imagine the reasoning was communicated to investors.
WHOOPS I didn't mean to reply to you lol, just to the post.
If anyone hasn't watched the latest wendover productions video I highly recommend it.
It covers John deere's transition into a technology company and details why they're laying off a lot of their factory workers. Link
You know it didn't use to be this way? There was a time when you could be 'A GE man'. You could work at a company for your whole life. You would not get laid off and rehired whenever it was convenient for the company, rather they'd show you some loyalty and you'd show them the same, this would be backed by employee profit sharing schemes, incentivising higher performance.
The heart of this deal between workers and management was ripped out when management chased higher share valuations, with stock bonuses for themselves instead of workers. It became cheaper to fire 1/80th of the workforce because you could break up unions that way, management could write off all those salaries to bump up the quarterly earnings, increasing the stock price and earning themselves bonuses at the expense of workers who as you said, just learn to get by.
Powell memo. That’s when it started.
You're looking at it from the perspective of the customer, but another aspect to get angry about is what is completely insane to someone who doesn't live in the US. How the fuck can a company hire people who they're going to let go in less than a year, and do that year and year? Where I live that's illegal. The government will grab the company by the balls if they do that.
If you're a company and you want to fire someone you first have to give a good reason why their position is being removed, then you need a good reason why you can't give them a different position within the company and finally, when you've actually fired the person, you need to give them a government regulated severance package, which is usually multiple months pay in advance. And you can't fire on the spot, you need to give at minimum a 2 week notice. In case you didn't notice, those are rules of you just want to fire a single person, layoffs have even more rules. In short, where I live companies use layoffs as a last resort because it's guaranteed to lose them money.
The entire hire/layoff cycle you take as something normal is something not normal to me. So this is a reminder to Americans that it is not normal and you can demand for more.
2 weeks! It is 3 months in norway for most work. This is mutual so it works both ways.
Seasonal/contract work is different tho, they know the start and end date when signing.
Nothing about the situation you described is normal or acceptable.
Though it's unrealistic to expect them too.
Why is that an unrealistic expectation? That's how it works in many countries with decent worker rights
Damn it I came in here to rage... Then read your post. Very well said and reasoned. Thank you for this perspective.
Maybe it's just my feed but lately all my posts are just rage/anger baits.... I want some good educational news damn it!